In order to remove mistakes or clear up unsubstantiated information in your credit report, you’ll need to dispute the information, which is every consumer’s right under the Fair Credit Reporting Act (FCRA). However, disputing errors on your credit reports the wrong way could be damaging or ineffective. (If you need help writing a dispute, consider using this sample dispute letter as a reference.)
It’s important to note that repairing your credit is something you can hire a professional to help you with, or something you can do on your own for free. Either way, if you’re in the process of disputing problems on your credit reports, these are six mistakes you’ll want to avoid.
1. Not Knowing What Exactly Is on Your Credit Reports
The first step to preparing your dispute is having copies of your credit reports. You can get free copies of your credit reports once per year by going to AnnualCreditReport.com. But many people make the mistake of only getting a report from one of the three main credit bureaus — Equifax, Experian and TransUnion — because they assume the information is the same across the board. This isn’t the case, so it’s important you look at all three reports so you know what is on each, what needs to disputed and with whom.
2. Not Being Clear in Your Dispute
You need to be specific when submitting your dispute — the credit bureaus receive many disputes and don’t have the time to decipher your request. A big mistake is “either not being clear about what item is being disputed and why you’re disputing it,” according to credit expert John Ulzheimer, formerly of FICO and Equifax. “You see a lot of stuff like this… ‘I don’t agree with the information on my credit report, please correct it.’ That’s unclear and the credit bureaus can’t reasonably infer what you’re disputing and why.”
Note: If you make your dispute online, it’s important to be aware that you are subject to arbitration clauses, which could undercut your efforts to resolve your case in court.
3. Limiting Your Inquiries to Disputes
According to Randy Padawer, a consumer education specialist for Credit.com partner Lexington Law, too many people start disputing items too early on in the process when they should be considering verifications as well.
“Both Equifax and TransUnion allow consumers to request general item verification without going through the formal dispute process,” Padawer said. Item verification requests a creditor or credit bureau to make sure that the information about an account on your credit report is fair, accurate and fully substantiated. “Most of the cases we handle for clients begin with requests for item verification,” Padawer said.
4. Disputing Before Applying for a Loan
Under the FCRA, the credit bureau has 30 days (occasionally 45 days) to respond to your claim. While an item is in dispute, depending on the scoring model, some aspects of the account are not taken into effect when calculating your credit score, so you may not be benefiting from all the information contained in your credit report.
If you are applying for a mortgage, any notations of “account disputed by consumer” on your credit report may hold up the loan process. With both Fannie Mae and Freddie Mac (FNMA and FHLMC) automated underwriting processes, a loan application will be kicked out of the system and have to undergo a manual underwriting process, or wait until your credit report has no disputes on it.
5. You Don’t Include Enough Information
When disputing something on your credit report, you are allowed (and encouraged) to provide supporting documentation.
“The system used to facilitate the dispute resolution process can accept attachments, so whatever you send to the credit bureaus is then passed on to the furnishing party so they can consider it in their investigation,” Ulzheimer said.
Having documentation can help support your dispute case, helping demonstrate the problem and proving it is in fact an error. It’s important to remember, however, that even if you do provide supporting information, the explanation may not be robust enough to impact the dispute process.
6. Not Knowing the Right Reason to Dispute
There are so many reasons you can give for a credit dispute, but some require specific clarification. A couple examples of dispute reasons that are often too vague or phrased incorrectly are:
- The debt is paid so it should be off my credit report. Paying off a debt does not remove it from your credit report right away. Without an intervention, negative information can stay on your reports for seven years. Closed accounts in good standing typically stay on your reports for 10 years.
- The debt is not mine because my ex-spouse is responsible for it per the divorce. Banks and other financial institutions will not automatically remove joint accounts which have been determined to be the responsibility of an ex-spouse via a divorce decree. However, sending in a copy of the decree and requesting that the account be eliminated from a credit report can result in the removal.
Times when a dispute is likely the right way to go include:
- The account is not yours (whether it’s appearing because of a clerical error, identity theft or something else).
- The account was not late.
- The balance is incorrect.
- The account should be listed as closed or open, but isn’t.
- The account should have “aged off.”
- The date of a delinquency is wrong.
As you monitor the results of your dispute, you can see how your credit scores are affected by checking out two of them, updated every 14 days, for free on Credit.com.